Hardly a week passes without another report of incompetent ministers mismanaging major governmental policy implementation. Last time it was IDS’s £300m cock-up at the DWP and this week it’s Jeremy Hunt and £1.2bn of public funds (for the hard of counting in the coalition that’s almost four times what the bedroom tax is claimed to be saving the government).
Under Jeremy Hunt, the guy that is now responsible for running the NHS, the Department for Culture Media and Sport set-up a process for rolling out broadband in rural areas of the UK which the Public Accounts Committee have today announced has been mismanaged and has allowed BT to exploit it’s monopoly provider position.
In 2011, then Culture Secretary Jeremy Hunt announced that 90% of premises in every local authority area of the UK should have access to internet speeds above 24 megabits per second by May 2015, with a minimum of 2Mbps for others.
The process has suffered from huge delays and is now due to be completed in 2017, nearly two years later than originally planned. (BBC News)
The process set-up by Hunt has, according to the PAC, given away £1.2bn of public money without undertaking adequate checking procedures and which has resulted in BT being awarded all of the contracts awarded so far:
“Commercial firms such as Virgin Media and BT see little profit in rolling out services to areas with few people living in them. So, as an incentive, the government provided a subsidy pot of £230m, with an extra £250m available after 2015, and awarded contracts on a county-by-county basis. Each county also contributed funds to bring superfast broadband to their areas.
But only Fujitsu and BT entered the bidding competition, with Fujitsu later withdrawing.
BT has so far been chosen in 26 counties and is expected to win the 18 remaining contracts.”
The PAC report goes on to say:
“The Department for Culture, Media and Sport’s design of the rural broadband programme has failed to deliver the intended competition for contracts, with the result that BT has strengthened its already strong position in the market”
It said that its contract terms were “overly generous” to BT and did not “promote value for money”.
BT’s bids were not checked to see if they were priced in a reasonable way and the PAC report states that BT provided “wildly inaccurate” estimates of costs.
“Local authorities are contributing over £230m more to the programme than the department assumed in its 2011 business case and BT over £200m less, yet BT will ultimately benefit from £1.2bn of public funding,” the report said.
BT has been criticised in the report for impeding rivals from drawing up alternatives with anti-competitive practices and for including a clause in contracts that ensured local authorities were prevented from disclosing the costs involved to other authorities who were also negotiating contracts with BT.
BT “exploited its quasi-monopoly position” to limit access to both the wholesale and retail market “to the detriment of the consumer”, concluded the report.
The PAC report recommends that the DCMS should not spend any more money until “it has developed approaches to secure proper competition and value for money”.
The DCMS has been responsible, along with local authorities, for investing £1.2bn of public money. BT originally proposed paying £1bn up front but in fact has only invested £300m (all of which will be reimbursed by the British taxpayer).
When the PAC compared the costs involved in providing each broadband street ‘cabinet’ in other countries it found that the costs charged by BT were three times those of similar installations in rural Ireland.
Margaret Hodge told Radio 4’s Today programme today that BT has been “ripping off” the British taxpayer and that “the way the contract was designed kept out competitors.”
Of course, none of this taxpayer largesse to one of its largest utility monopolists is in any way related to the recent appointment of the, now former, CEO of BT who negotiated this sweetheart deal with Hunt’s DCMS, as a coalition government trade minister.
As reported in the Independent back in July:
The outgoing boss of BT who will become a government trade minister later this year is facing questions about “unprecedented” conflicts of interest over his multimillion-pound stake in the British telecoms giant.
Despite David Cameron’s own promises on transparency and accountability, Downing Street has failed to offer “robust” safeguards to deal with issues caused by bringing Ian Livingston directly into the government from BT, according to a former trade minister.
Mr Livingston is expected to hold close to £20m worth of shares in BT when he becomes a minister in the Department of Business, Innovation and Skills (BIS) which oversees the industry where the telecommunications giant competes.
…This is additional wealth that could potentially be influenced by the policies and actions of the ministerial team of which he will be a member.
…Advanced discussions currently taking place in private inside BIS and Downing Street are predicted to lead to a return of the competition and policy issues relating to media, broadcasting and digital telecoms which were transferred to DCMS in 2011 in the wake of the controversy surrounding Vince Cable and Rupert Murdoch’s BSkyB take-over bid.
When completed, expected to be before the 2015 general election, the move increases the importance of the telecoms industry inside BIS.”
So much for the “disinfectant of sunlight” that David Cameron is fond of claiming pervades this government’s activities.
Has there been a more incompetent, amateur and self-aggrandising British government in modern times?
Source: BBC News / The Independent / BBC Radio 4
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- PAC: BT And Government Are Killing Broadband Competition (techweekeurope.co.uk)
- BT has ‘near monopoly’ on rural broadband, say MPs (theguardian.com)
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